Jobless rate falls to four-month low

THE unemployment rate has fallen to a four-month low but the number of people looking for work has also fallen.

The unemployment rate fell to 5.8 per cent in March from 6.1 per cent in February, according to seasonally-adjusted figures released by the Australian Bureau of Statistics on Thursday.

The participation rate - the proportion of the population that have a job, are looking for work or are ready to start work - fell to 64.7 per cent, from February's 64.9.

ANZ chief economist Ivan Colhoun said the better-than-expected result was partially driven by the falling participation rate as well as job creation.

"The Australian economy has improved a bit in the last three to six months," Mr Colhoun said.

"I think the rebalancing is definitely happening. We can see housing approvals and construction strengthening, we can see consumer spending strengthening a bit, we can see job ads improving ... we can even see some better signs from non-mining investment intentions.

Mr Colhoun said ANZ expected the unemployment rate to peak around the six per cent mark over the next few months.

The total number of people with jobs rose 18,100 in March after a surprise rise of 48,200 in February.

RBC Capital Markets senior economist Su-Lin Ong said the figures show the employment market is strengthening despite the fall in the participation rate.

"Employment growth has really picked up pace so far in 2014," she said.

"There was a small drop in the participation rate but when you look at the details, particularly the continued gains in employment growth, it's consistent with underlying strength in the labour market.

"I think it's a pretty encouraging picture, it's consistent with what the leading indicators have been telling us.

"There's a good chance that the labour market will look better in 2014, compared with what was a fairly subdued 2013."

CommSec chief economist Craig James said job creation so far in 2014 was at its strongest in two years.

"There is no question that the economy has lifted and it is pretty clear that the transition in activity from mining to housing construction has been a case of so far so good," he said.

"The job market is showing signs of stabilising with unemployment having peaked or pretty close to it."

Mr James said the jobs figures confirm that another interest rate cut by the Reserve Bank of Australia is off the table.

"It is unlikely that the Reserve Bank will shift away from its 'interest rate stability' rhetoric any time soon," he said.

"A few more months of robust employment would be required.

"However the data is suggesting that a December quarter rate hike - that we had previously forecast - may actually come earlier."